july 05, 2016 - mstc e-commerce · kerala state electricity board 2. odisha hydro power corp. 3....

SCOPE Convention Centre, New Delhi

July 05, 2016

ALLOTMENT OF COAL MINES TO STATE GOVERNMENT COMPANIES OF HOST

STATES/ STATES OTHER THAN HOST STATES FOR SALE OF COAL

2

Background

Sep’14 • Supreme Court of India cancelled the allocation of 204 coal blocks

Oct’14

• Promulgation of the Coal Mines (Special Provisions) Ordinance, 2014 and Second Ordinance which were replaced by The Coal Mines (Special Provisions) Act, 2015 (Act)

• GoI appointed the Nominated Authority to take all the necessary actions

Dec’14 • Notification of the Coal Mines (Special Provisions) Rules, 2014 (Rules)

Mar’16

• Central Government has issued an order to the Nominated Authority under Rule 8 (2) (a) (ii) of the Rules (Rule 8(2) Order) for allotment of 16 coal mines pursuant to Section 5 (1) of the Act

Apr’16

• Start of the process for allotment of 8 coal mines to State Government companies of coal bearing host states for sale of coal under the Act

Jun’16

• Start of the process for allotment of 8 coal mines to State Government companies of States other than coal bearing host states for sale of coal under the Act

3

List of Coal Mines for Allotment to Host States

S. No. Coal Mine Location Prior Allottee

1 Baitarni West Odisha 1. Kerala State Electricity Board

2. Odisha Hydro Power Corp.

3. Gujarat Power Corporation Ltd.

2 Dahegaon /

Makard hokra – IV

Maharashtra 1. IST Steel & Power Ltd.

2. Gujarat Ambuja Cement Ltd.

3. Lafarge India Pvt. Ltd.

3 Dongeri Tal – II Madhya

Pradesh

Madhya Pradesh State Mining Corporation Ltd.

(MPSMC)

4 Gourangdih ABC West Bengal 1. Himachal EMTA Power Ltd.

2. JSW Steel Ltd.

5 Marki Barka Madhya

Pradesh

Madhya Pradesh State Mining Corporation (MPSMC)

6 Patal East Jharkhand Bhushan Power and Steel Ltd.

7 Penagaddppa Telangana Andhra Pradesh Power Generation Corpn. Ltd.

8 Shankarpur

Bhatgaon II Extn.

Chhattisgarh Chhattisgarh Mineral Development Corporation

Limited

Note: The above list is indicative. Mines may be added / deleted from the list.

4

List of Coal Mines for Allotment to Non-Host States

S. No. Coal Mine Location Prior Allottee

1 Anesttipali Telangana Andhra Pradesh Power Generation Corpn. Ltd.

2 Kosar Dongergaon Maharashtra Chaman Metaliks Ltd.

3 Madanpur South Chhattisgarh 1. Hindustan Zinc Ltd.

2. Akshya Investment Pvt. Ltd.

3. Chhattisgarh Steel & Power Ltd.

4. Chhattisgarh Electricity Corporation Ltd.

5. MSP Steel & Power Ltd.

6. Chhattisgarh Captive Coal Mining Ltd.

(Consortium of five Cos. )

4 Mednirai Jharkhand 1. Rungta Mines Limited

2. Kohinoor Steel (P) Ltd.

5 Punkula-Chilka Telangana Andhra Pradesh Power Generation Corpn. Ltd.

6 Sahapur East Madhya Pradesh National Mineral Dev. Corp.

7 Sahapur West Madhya Pradesh National Mineral Dev. Corp.

8 Suliyari Madhya Pradesh Andhra Pradesh Mineral Development

Corporation

Note: The above list is indicative. Mines may be added / deleted from the list.

5

Schedule of the Allotment Process

Event Description Host States Estimated Date

Non-host States Estimated Date

Last date & time for receiving requests for Site Visit 1700 hours on July 07,

2016

1700 hours on July 11,

2016

Last date of receiving queries from Applicants 1700 hours on July 14,

2016


2016

Last date for responses to queries by the

Nominated Authority

July 19, 2016 July 28, 2016

Last date & time for registration of Applicant on

MSTC Website


2016


2016

Last date for downloading Allotment Document July 25, 2016 August 01, 2016

Last Date & Time for Submission of Application 1700 hours on July 27,

2016

1700 hours on August 08,

2016

Application Opening Date July 28, 2016 August 09, 2016

Publication of Results & Intimation to Allottee August 04, 2016 August 19, 2016

Execution of Allotment Agreement August 08, 2016 August 23, 2016

Last date for furnishing of Performance Security

and Payment of Fixed Amount and first instalment

of Upfront Amount

1700 hours on September

08, 2016

1700 hours on September

22, 2016

Issuance of Allotment Order September 14, 2016 September 27, 2016

Allotment Process

7

Eligibility Criteria

Applicants are required to ensure that they meet the eligibility conditions for allotment as mentioned in Section 5(1) of the Act

It is clarified that

– the conditions prescribed in second and third proviso of Section 5(1) of the Act are continuous requirements and should be complied with at all times

– the expression “Government Company” is defined in Section 3(1)(i) of the Act which refers to section 2(45) of the Companies Act, 2013

– The expressions “associate company” and “subsidiary” would have the same meanings as assigned to them in Sections 2(6) and 2(87), respectively, of the Companies Act, 2013

8

Eligibility Criteria

Host States Non-host States

Applicant must be either:

• a Government company/corporation of the Host

State; ‘or’

• a JV between two or more Government companies

or corporations of the Host State; ‘or’

• a JV between a Government company/corporation

of the Host State and a Government company/

corporation of the Central Government where not

less than 51% of shares are held by the Host State

Government directly or indirectly, provided that no

company other than a Government

company/corporation of the Host State or of the

Central Government holds more than 26% of its

paid up share capital either directly or through any

of its subsidiary company or associate company

Applicant must be either:

• a Government company/corporation of a single Non-

host State

• a JV between two or more Government companies

or corporations of a single Non-host State

• a JV between a Government company/corporation of

a single Non-host State and a Government company/

corporation of the Central Government where not

less than 51% of shares are held by the Non - host

State Government directly or indirectly, provided that

no company other than a Government company/

corporation of the Non - host State or of the Central

Government holds more than 26% of its paid up

share capital either directly or through any of its

subsidiary company or associate company

Applicant should be either:

• Host State PSU incorporated for the purpose of

mining; ‘or’

• any other Host State PSU which carries a letter of

recommendation for allotment addressed to the

Nominated Authority from the Host State Govt

Applicant should be either:

• Non-host State PSU incorporated for the purpose of

mining; ‘or’

• any other Non-host State PSU which carries a letter

of recommendation for allotment addressed to the

Nominated Authority from the Non-host State Govt

9

Application Process

Applicants

Preferred Applicant

Applicants would be required to submit duly completed Applications on the electronic platform of MSTC

Duly completed Applications shall be opened and evaluated by the Nominated Authority for compliance with the Eligibility Conditions and shall be tested for responsiveness

Applicant selected on the basis of norms specified and shall be recommended as the Preferred Applicant for the Coal Mine

Nominated Authority shall recommend the name of the Preferred Applicant to the Central Government

Upon receipt of a direction from the Central Government that an Allotment Order should be issued to the Preferred Applicant, the Preferred Applicant shall be declared as the Allottee and the Allotment Agreement shall be executed

Allotment Order shall be executed after the Allottee furnishes the Performance Security, Fixed Amount and first instalment of Upfront Amount

Allottee

10

Online Electronic Application Process

Applicants would be required to register on http://www.mstcecommerce.com, create User ID and password and submit the online registration form

Submission of mandatory documents and authorization letter would lead to activation of Applicant by MSTC

The Allotment Document is available prior to registration

The Mine Dossier specific to the coal mine would be available subsequent to registration

A Class III DSC would be required for submission of application and person holding the DSC should be duly authorized by the competent authority of the Applicant

http://www.mstcecommerce.com/








11

Application| Documents to be Submitted

Online Submission

Allotment Application

Formats as per Annexure IV of the Allotment

Document

Scan of Offline Documents - Affidavit, PoA, Board

Resolution

Offline Submission – Original Documents

Affidavit

Power of Attorney

Board Resolution

12

Tests of responsiveness of Application

The Nominated Authority reserves the right to reject any Application which is non-responsive and no request for alteration, modification, substitution or withdrawal shall be considered or permitted by the Nominated Authority in respect of such Application

While making any determination with respect to responsiveness of an Application, the Nominated Authority may consider such parameters as it may deem relevant, including considerations that the Application:

– is received as per the prescribed formats

– is received by the Last Date for Application submission including any extension thereof

– is submitted in the manner prescribed in this Allotment Document

– is accompanied by a Power of Attorney and an Affidavit

– contains all the information (complete in all respects) as requested

– does not contain any condition or qualification

– only 1 (one) Application has been made for the specific Coal Mine by an applicant, either directly or indirectly

– is generally considered to be responsive in terms of any other parameters as may be considered relevant by the Nominated Authority

13

Evaluation Criteria – Allotment to Host State

In the event that only one Application is considered to be in compliance with all the Eligibility Conditions and is responsive to all the tests of responsiveness for the Coal Mine, the Applicant which submitted such Application shall be recommended as the “Preferred Applicant”

In the event that, more than one Application is considered to be in compliance with all the Eligibility Conditions and responsive, then the following norms shall be considered for the purpose of selection

– Material Handling Experience (M cu. m) for past 3 financial years

– Mineral extracted and sold (million tonnes per annum i.e. mtpa) during the past 3 financial years

Based on such criteria, score shall be assigned to each Applicant.

Applicant achieving the highest score shall be declared as Preferred Applicant.

However, in case of a tie between the scores of two or more qualified Applicants, then other operational and/or financial performance parameters of such Applicants may be considered e.g. safety, net-worth, turnover etc.

14

Evaluation Criteria – Allotment to Host State …2

For each criteria, average score for 3 financial years i.e. FY2013, FY2014 and FY2015 shall be taken for computing weighted average score. Further, the ‘mineral extracted and sold’ quantity shall be the quantity which the Applicant has produced and sold and not merely traded

S. No. Criteria Score Weightage

1

Material Handling Experience (M cu. m) for past 3 financial years

50%

No experience 0

Greater than 0 and less than or equal to 5 1


Greater than 10 3

2

Mineral extracted and sold (million tonnes per annum i.e. mtpa)

during the past 3 financial years

50% No experience 0



Greater than 5 3

15

Evaluation Criteria – Allotment to Non-host State

In the event that only one Application is considered to be in compliance with all the Eligibility Conditions and is responsive to all the tests of responsiveness for the Coal Mine, the Applicant which submitted such Application shall be recommended as the “Preferred Applicant”

In the event that, more than one Applications are considered to be in compliance with all the Eligibility Conditions and responsive, then the following norms shall be considered for the purpose of selection

– Applicant is owned by the state government of Adjoining State to the Host State

– Number of people employed in Registered MSME Sector in accordance with the Fourth All India Census of MSME Sector (in lakhs) per State

Based on such criteria, score shall be assigned to each Applicant.

Applicant achieving the highest score shall be declared as Preferred Applicant.

However, in case of a tie between the scores of two or more qualified Applicants, then other operational and/or financial performance parameters of such Applicants may be considered e.g. safety, net-worth, turnover etc.

16

Evaluation Criteria – Allotment to Non-host State …2

S. No. Criteria Score Weightage

1

Applicant is owned by the state government of Adjoining State to the

Host State

50% No 0

Yes 10

2

No. of People Employed in Registered MSME Sector in accordance with

the Fourth All India Census of MSME Sector (in lakhs) per State

50%

<=0.5 1

0.5 < No. <= 2.0 2

2.0 < No. <= 3.5 3

3.5 < No. <= 5.0 4

5.0 < No. <= 6.5 5

6.5 < No. <= 8.0 6

8.0 < No. <= 9.50 7

9.50 < No. <= 11.0 8

11.0 < No. <= 12.5 9

No >12.5 10

17

Evaluation Criteria

Mines earmarked for Host States shall be allotted first.

Maximum of 2 coal mines shall be allotted to the Applicant(s) owned by a particular State government under this Allotment Tranche.

In case, Applicant(s) owned by one State government are emerging as the Preferred Applicants for more than 2 coal mines, then out of the total mines earmarked for allotment for sale of coal under this Allotment Tranche, a maximum of 2 mines may be allotted to Applicant(s) owned by a particular State Government.

Payments/ Guarantees

19

Payments by the Allottee

Fixed Amount

•Value of land

•Value of mine infrastructure

•Cost of consents

•Cost of GR

•To be paid prior to issuance of Allotment Order

Upfront Amount

•50% to be paid prior to issuance of Allotment Order

•25% to be paid on or before 15 Business Days from the date of notification under Section 11(1) of the CBA Act, 1957 OR on or prior to expiry of 15 Business Days from the date of execution of the Mining Lease

•25% to be paid on or prior to expiry of 15 Business Days from the date of grant of mine opening permission

Periodic Payments

•A Reserve Price equivalent to the amount of the royalty on coal as per prevalent rate shall be payable as per actual production of coal (including the Allottees in the state of West Bengal)

•The amount of Reserve Price will be calculated as per the extant / prevailing rate of royalty ad-valorem on price of coal as reflected in the invoice, excluding taxes, levies and other charges.

•To be made within 20 calendar days of expiry of each month

•Statutory royalty and other levies shall be payable additionally as per Applicable Laws

20

Performance Security

Amount, aggregate of

a) 1 year royalty on the basis of PRC of the mine as per the approved Mine Plan

b) PRC x Reserve Price

Revision on account of

a) Revision in rate of royalty

b) Revision in CIL Notified Price

c) Upward revision in Mine Plan

Validity

As specified in the Allotment Agreement

Appropriation

may be appropriated by the Nominated Authority in the manner specified in the

Allotment Agreement

Performance Security

Allottee shall provide an irrevocable and unconditional guarantee from an Acceptable Bank for the performance of its obligations within the prescribed timeline

21

Performance Security …2

In the event that approved Mine Plan is not available, then the Performance Security shall be calculated on the basis of estimated Peak Rated Capacity. The amount of Performance Security shall be revised after approval of the Mine Plan

For the purpose of calculation of Performance Security, royalty and Reserve Price shall be determined as follows:

– Except for Coal Mine(s) located the State of West Bengal, the royalty and Reserve Price shall be determined on the basis of CIL Notified Price

– For Coal Mine(s) located the State of West Bengal, Reserve Price shall be determined on the basis of CIL Notified Price and the royalty shall be determined as per the prevailing rate of royalty

Important Terms

23

Sale of Coal

“MSME” means a micro enterprise, or a small enterprise or a medium

enterprise as defined in Micro, Small and Medium Enterprises

Development Act, 2006, as amended from time to time

“MSME Share” shall mean 25% of the coal production from the Coal Mine

in a quarter beginning April/ July/ October/January in a financial year. The

Nominated Authority shall have the right to alter the MSME Share, from

time to time

“Balance Coal” means coal sold from the Coal Mine which is not part of

the MSME Share

“Unsold Quantity” means a positive number equal to the MSME Share less

the actual sale to MSME in a quarter

24

Sale of Coal …2

The coal produced from the Coal Mine shall be sold by the Allottee through:

— an e-auction for supply of coal over a period of time pursuant to a contract (“Coal Supply Agreement”); and/or

— e-auction for specified quantity of coal (“Spot Sale”)

In every quarter, Allottee shall sell not less than the MSME Share to MSME buyers of its own State and Balance Coal to other buyers on pan-India basis

At the beginning of each quarter, Allottee shall prepare a rolling forecast/ projection regarding coal to be extracted from the mine and made available for purchase for the forthcoming 2-4 quarters

A reasonable quantity of coal from MSME Share shall be apportioned for Spot Sale in order to meet the requirement of seasonal industries

In the event that the actual coal made available for purchase to MSME buyers is less than the MSME Share, then the shortfall shall be adjusted in the subsequent quarter

MSME Share shall be calculated mandatorily on annual basis.

Any quantity which could not be sold under the MSME share at the end of financial year in the state shall be offered to MSMEs across India in the first quarter of next financial year

25

Sale of Coal …3

The Unsold Quantity, if any, may be sold by the Allottee to any buyer including MSME buyers, in the subsequent quarter. However, the MSME Share shall be calculated mandatorily on annual basis

If in a quarter, sale to MSME is more than MSME Share, no reduction shall be made in MSME Share in the subsequent quarter

Sale of coal shall be made in a fair and transparent manner on a non-discriminatory basis

26

Flexibility in Coal Production Schedule

The Allottee shall be allowed to manage its coal production quantity (subject to the cap as per the Mine Plan) in the event of any economic downturn or other such event.

Actual production of coal in any year should not be less than 50% of the coal production as per the Mine Plan.

However, in any five year block, the Allottee is required to produce at least 80% of the coal as per the Mine Plan.

It is clarified that in such event, the MSME Share on annual basis shall remain the same.

In the event that State Pollution Control Board approves the mining operations with a downward revision in Peak Rated Capacity (“PRC”), then the minimum production criteria as explained above will be applicable on this modified PRC

27

Security & Prohibition

Allottee shall be entitled to create security over the Coal Mine through mortgage for the purposes of availing financing from a bank or financial institutions

– No prior approval required from the Nominated Authority / GoI

In the event of a default, the banks / financial institutions shall be entitled to enforce their security interest, provided that any transferee of the Coal Mine meets all the Eligibility Conditions.

In case the Allottee is a Joint Venture company, such companies shall be prohibited from alienating or transferring any interest, except for taking of loans or advances from a bank or financial institution, in the joint venture of whatsoever nature including ownership in favour of a third party.

Thank You

29

Section 5 (1) of the Act

Notwithstanding the provisions contained in sub-sections (1) and (3) of section 4, the Central Government may allot a Schedule I coal mine to a Government company or corporation or to a joint venture between two or more Government companies or corporations or to a company which has been awarded a power project on the basis of competitive bids for tariff (including Ultra Mega Power Projects) from specified Schedule I coal mines by making an allotment order in accordance with such rules as may be prescribed and the State Government shall grant a reconnaissance permit, prospecting licence or mining lease in respect of any area containing coal to such company or corporation.

– Provided that the Government company or corporation may carry on Coal Mining in any form either for its own consumption, sale or for any other purpose in accordance with the permit, prospecting licence or mining lease, as the case may be.

– Provided further that no company other than a Government company or corporation shall hold more than twenty-six per cent of the paid-up share capital in the Government company or corporation or in the joint venture between a Government company or corporation, either directly or through any of its subsidiary company or associate company.

– Provided also that a joint venture of any two or more Government companies or corporations shall be prohibited from alienating or transferring any interest, except the taking of loans or advances from a bank or financial institution, in the joint venture of whatsoever nature including ownership in favour of a third party

30

Flexibility in Coal Production Schedule

The mining plan submitted by the Allottee of 20 MTPA maybe revised downwards by the Pollution Control Board which is 18 MTPA in this illustration

Due to adverse market condition or whatsoever reason, there can be annual reduction of 50% in the peak production which is illustrated from years Y12 to Y16

In the last year, the production has to be 100% of PRC to meet the 80% production criterion over the 5 year block

0

10

20

30Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Y9

Y10

Y11

Y12

Y13

Y14

Y15

Y16

Y17

Y18

Y19

Y20

Y21

Y22

Y23

Y24

Y25

Y26

Y27

Y28

Y29

Y30

Mining Plan (PRC)

SPCB Approved Plan (PRC)

Y12 Y13 Y14 Y15 Y16 5 year Block Production 17 15 9 13 18 72

PRC 18 18 18 18 18 90 Percentage of PRC 94.44% 83.33% 50.00% 72.22% 100% 80%